Derwent London rental income, earnings rise amid 'robust' demand

Property investment and development company Derwent London reported a rise in interim net rental income and EPRA earnings on Thursday as it hiked its dividend by 10% and highlighted "robust" occupier demand in the capital.

In the six months to 30 June, net rental income was up 1.6% to £80.6m as EPRA earnings rose 47.4% to 66.9p a share, while underlying earnings pushed up 14% to 51.8p a share.

The company, which lifted its interim dividend to 19.10p per share from 17.33p in the first half of 2017, said new lettings totalled £8.4m, up 8.2% from the December 2017 estimated rental value.

Derwent's portfolio is now valued at £5bn, which is an underlying increase of 1.3% for the first half.

The group said occupier demand remains good, with the vacancy rate rising to 4.6% from 4.3% in December, but still below the long-term average of 5.1%.

Derwent said momentum from the first half has continued into the second, as the group has pre-let a further £3.4m, including the top two floors of the Brunel Building in W2, which is now 40% pre-let.

Chief executive John Burns said: "London's robust occupier demand has endorsed our actions to push ahead with recent developments, and we are now in a strong position to proceed with our next two major projects. We remain confident that Derwent London will continue to deliver the buildings for today's occupiers and grow our earnings over the medium term."

Liberum, which rates the stock at 'hold', said Derwent remains in a good position to navigate market uncertainty, with low financial risk and an office portfolio less exposed to new supply and financial services occupier risk.

At 1045 BST, the shares were down 0.1% at 3,113p.